Correlation Between Skandinaviska Enskilda and Hufvudstaden
Can any of the company-specific risk be diversified away by investing in both Skandinaviska Enskilda and Hufvudstaden at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Skandinaviska Enskilda and Hufvudstaden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skandinaviska Enskilda Banken and Hufvudstaden AB, you can compare the effects of market volatilities on Skandinaviska Enskilda and Hufvudstaden and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Skandinaviska Enskilda with a short position of Hufvudstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skandinaviska Enskilda and Hufvudstaden.
Diversification Opportunities for Skandinaviska Enskilda and Hufvudstaden
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Skandinaviska and Hufvudstaden is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Skandinaviska Enskilda Banken and Hufvudstaden AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hufvudstaden AB and Skandinaviska Enskilda is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Skandinaviska Enskilda Banken are associated (or correlated) with Hufvudstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hufvudstaden AB has no effect on the direction of Skandinaviska Enskilda i.e., Skandinaviska Enskilda and Hufvudstaden go up and down completely randomly.
Pair Corralation between Skandinaviska Enskilda and Hufvudstaden
Assuming the 90 days trading horizon Skandinaviska Enskilda Banken is expected to under-perform the Hufvudstaden. In addition to that, Skandinaviska Enskilda is 1.18 times more volatile than Hufvudstaden AB. It trades about -0.04 of its total potential returns per unit of risk. Hufvudstaden AB is currently generating about 0.18 per unit of volatility. If you would invest 12,430 in Hufvudstaden AB on February 4, 2024 and sell it today you would earn a total of 680.00 from holding Hufvudstaden AB or generate 5.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Skandinaviska Enskilda Banken vs. Hufvudstaden AB
Performance |
Timeline |
Skandinaviska Enskilda |
Hufvudstaden AB |
Skandinaviska Enskilda and Hufvudstaden Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Skandinaviska Enskilda and Hufvudstaden
The main advantage of trading using opposite Skandinaviska Enskilda and Hufvudstaden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skandinaviska Enskilda position performs unexpectedly, Hufvudstaden can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hufvudstaden will offset losses from the drop in Hufvudstaden's long position.Skandinaviska Enskilda vs. Fractal Gaming Group | Skandinaviska Enskilda vs. Nilsson Special Vehicles | Skandinaviska Enskilda vs. MTI Investment SE | Skandinaviska Enskilda vs. Investment AB Oresund |
Hufvudstaden vs. Fabege AB | Hufvudstaden vs. Castellum AB | Hufvudstaden vs. Wallenstam AB | Hufvudstaden vs. Fastighets AB Balder |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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